SUPERMARKET chain Sainsbury's slumped to its first-ever loss today after counting the cost of the restructuring needed to revive its fortunes.

The troubled group posted losses of é39 million in the six months to September 30, down from profits of é323 million a year earlier.

Stripping out é168 million of exceptional items, Sainsbury's achieved underlying profits of é131 million - in line with the City's recently revised expectations.

The 135-year-old group achieved a 3.5% rise in sales at é8.35 billion, but took a hit of é401 million from the costs involved in the business review announced by chief executive Justin King last month.

He wants to recruit an extra 3,000 staff and get the retailer back to basics after sales slumped in the face of problems with product availability.

In total, the business review is expected to cost Sainsbury's é550 million over the financial year, with only the recent sale of US chain Shaw's helping to prop up the results. Further exceptional items of é168 million were taken in today's figures, relating in part to accounting charges.

As a result, analysts expect the chain to also post a small loss over the 12 month period.

The retailer was once the UK's biggest supermarket chain but has since been overtaken by rivals Asda and Tesco.